Accounting and financial firms and business groups are sending comment letters to the Securities and Exchange Comment ahead of a deadline Friday for approving a new standard from the Public Company Accounting Oversight Board on expanding the scope of audit reports. In June, the PCAOB voted to approve a new standard that would significantly change the auditor’s reporting model, adding a section discussing “critical audit matters” (see PCAOB makes major changes to auditor’s report).

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As currently designed, this standard will lead to the disclosure of immaterial information, increase liability costs for businesses and audit firms, and create a chilling effect on audit committee-auditor communications.

We support the Proposed Rules' auditor reporting model that requires the independent auditor to communicate CAMs in the auditor's report.

We believe the required information regarding auditor tenure will be useful to investors in deciding whether to vote to ratify appointment of the auditor and on the election or reelection of the audit committee chair and members.